Magic Time

Can Magic Johnson and Dozens of other venture capitalists seed and mentor enough entrepreneurs to fill downtown Detroit?

By R.J. King

Published: February 27, 2012

(page 1 of 7)

Detroit was the Silicon Valley of its day. The automotive, aviation, film, and medical industries complemented a landscape rich with engineers, scientists, inventors, and researchers. There seemingly was nothing the city couldn’t manufacture on a global scale.

Prior to V-E Day, Detroit produced more cars, planes, parts, machinery, film, and drugs than any other place on the planet. But in the summer of 1945, with the official end of World War II, the city’s mercurial growth streak succumbed to the economic laws of supply and demand.

Detroit, the “Arsenal of Democracy,” was left with too many factories, too many workers, and not enough jobs. Compounding the problem was the fact that the plants that had generated hundreds of thousands of planes, tanks, trucks, weapons, and ammunition occupied large swaths of land within residential neighborhoods. During the war, smart urban planning had taken a backseat to arming soldiers on the front line.

After the war ended, Ford Motor Co., the world’s largest producer of aircraft, quickly withdrew from the aviation sector. The automaker was nearly on life support, due to mismanagement — Henry Ford’s security chief, Harry Bennett, was effectively running the company, while the patriarch’s grandson, Henry Ford II, had yet to prove he could assemble a team to realign the conglomerate’s prodigious manufacturing operations to the production of cars and trucks.

General Motors, Chrysler, Packard, and the other automakers quickly followed suit. The aviation industry soon consolidated on the West Coast. The pattern was repeated with the film industry (automakers no longer sought to create their own commercials) and drug manufacturers (bigger players took over). Parke Davis in Detroit, which developed the modern medical laboratory and produced millions of pills and medications, was eventually folded into Pfizer Inc.

In hindsight, the city and region should have done more to maintain economic diversity, but demand for consumer goods didn’t perk up until the 1950s. As time went on, rising family wealth, combined with racial tensions exaggerated by real estate agents, saw the great migration of Detroit residents to the suburbs. Left behind were empty factories, empty homes, empty stores, and a fairly unskilled workforce. Some say Detroit went from 1.0 to 0.0.

The legal battle between Wayne County and a team of contractors over cost overruns at the shuttered jail project in Detroit reveals a dysfunctional government structure, and an inconclusive FBI investigation, and an ongoing grand jury criminal probe.